A Look at How the CEO Role is Evolving
August 5, 2024 – Geopolitical waves, digitization and AI. The drive for sustainability. Demands for full transparency and the changing needs of talent. These and other forces have dramatically broadened the CEO role, according to a recent report from Amrop. The traditional routes to the top seat are already changing. Following the firm’s exploration of the C-suite ecosystem, they now ask: what will the CEO for what’s next look like? What determines the survival of the fittest?
Technical ability is no longer enough; the new CEO is a sense-maker; in a turbulent environment, an organization’s true north is as important as its bottom line. Culture, values and sustainability head the agenda of today’s high-performing C-suite — and CEO. As one Amrop managing partner puts it: “It’s all totally connected and that‘s going to be rated, looked at, make the difference.”
Will today’s CEOs need even more grit and gravitas? An Amrop board member confirms, “We do want to get a sense of that. How readily can this person go into a boardroom, into major clients, command an audience, reach out and get the call-backs? Do what needs to be done to be a true leader? And not everybody can. Getting the softer skills right and the mindset around how you engage people differently will lead companies to greater profitability over time. It doesn’t replace technical skills. Your operational mindset, absolutely not. But this is no longer about just being a technical, operations or salesperson. It’s how you package all of this together to get the best out of your people and create the best for your organization and other stakeholders.”
Expressing and installing the ‘way we do things around here’ have become critical for the CEO. But whilst digitization and hybrid working connect people faster and more often, the depth of connectivity is questionable, the report explains. As one Amrop managing partner puts it: “Digitization and sustainability expectations make it very challenging to define the essence of culture. It is definitely more complicated to shape.”
Today’s CEO is a Public Figure
The imperative to express the organization’s purpose fluently and authentically further seals the extinction of the discrete technocrat. “The CEO role has definitely changed,” says one Amrop partner. “It has become much more public, representing the values of the company, its ESG agenda and overall purpose… And no matter how good an operator you are, it’s a different skill set.”
An Amrop board member goes even further: “I sometimes refer to the CEO as the chief brand officer or the chief reputation officer. Because this is the person who sets the tone from the top.”
The CEO has to Demonstrate Work Life Balance
Role modeling has long been a pillar of organizational trust-building. A recurrent concern is work life balance. The CEO is being scrutinized by a generation who are skeptical about diktats such as: ‘we’re the winning team, no matter what it takes’. The CEO must embody a culture of wellbeing — reconciling health and wealth.
“You can’t have a CEO who works 100 hours a week and then says: ‘we have a good work life balance in the rest of the organization’. It doesn’t work like that anymore,” says one Amrop partner. “You’re also seeing a lot of personal portraits of CEO’s, and them having to be role models.”
The Amrop Talent Observatory explores why senior executives join or leave an organization. Ninety percent would be repelled by a serious reputational fallout, no matter how attractive the firm might be in other respects.
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“CEO reputation is make or break. We have seen so many instances of CEO reputation damaging not only organizations but whole industries,” warns one Amrop managing partner. “At these levels, demands and transparency in the expectations have increased.” He adds rating agencies to the list of observers.
The Rise of the CEO-Communicator
Today, many CEOs are media personalities, bearing all the expectations of the Instagram age. “You’re definitely seeing CEOs suddenly having to have an opinion about our purpose and impact in the world as an organization, the long-term goals, being very communicative,” says one Amrop partner “You need to be media trained, knowing what to say in a storm. You need a blog or podcast, all these communication channels. But even this is not enough. It’s important what you do in your personal life, that you look fit, all these other things that weren’t at all an issue in the past. Suddenly you become your persona and company.”
Mastering the Macro and the Micro
The CEO must also be available on the internal frontlines. A global Amrop/IMD study explores the leadership dimension of large midcaps. In over eighty interviews with C-suite members, the presence of the CEO at the coalface emerges as a distinctive factor.
What Skills Do CEOs Need Today to Succeed
While the pandemic is in the rearview mirror, that doesn’t mean we aren’t experiencing challenging times. From economics to politics, and from cyber threats to artificial intelligence (AI), the world can be difficult to navigate—and so can the role of a CEO. A 2024 survey from The Conference Board showed that inflation and a possible recession are the leading concerns among CEOs worldwide. Meanwhile, AI is reshaping nearly every aspect of the workplace. All of this is occurring against a seemingly constant backdrop of conflict and global unrest, according to a new report from DHR Global.
Disaffected employees in a digital workplace will intensify this need if the CEO is to deliver on the culture-building mandate, the study found. But it is a balancing act: as well as being on the terrain, the CEO must also rise above it. As this Amrop managing partner puts it: “They have to be foresightful, see things from a high level and ground themselves to the battlefield, otherwise they lose touch. And they cannot implement the strategy.”
The Wise and Purposeful CEO
“The fittest CEOs live and breathe purpose,” the Amrop report said. “A fundamental sense of ‘the why’ helps to navigate ambiguity and complexity, differentiating important from urgent. It supports consistency and authenticity.” As one Amrop managing partner says: “It really goes back to wise leadership — the CEO’s value system and ability to shape a culture and the community, combined with mastering this larger arena of topics.”
A purposeful CEO is moved by a deeper motivation than company mission, he says. “If they are driven by conscience, by fundamental values, plus all the capabilities and qualifications, they become extremely powerful and positive value-creating CEOs.”
Purpose Creates a Virtuous Circle
“CEOs need to be far more purposeful than they’ve ever been,” said an Amrop board member. “And if you’re looking at how you’re going to attract and retain your key talent, people want to work for organizations where there is purpose.”
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Amrop’s Talent Observatory supports this. Examining why senior executives jumped ship, it found that factors related to support, growth, beliefs and values far outstripped ‘hard’ factors, such as compensation or contracts.
“It’s typically the CEO who’s going to lead,” says an Amrop board member. “And if you’re looking at your next generation of followers, it’s how you engender that followership. So, it’s not just about your top line and bottom line anymore.”
Wisdom and Purpose
Today’s business ecosystem is a forest of thinking traps, according to the Amrop report. “Wise and purposeful CEOs are better equipped to resolve its dilemmas,” it said. “Their true north provides a helicopter view. Values and principles guide their decisions. These CEOs possess strategic sensing. They are forward-looking, with an eye on the best opportunity, rather than blindly reactionary. They are integrative – capable of sophisticated interpretation and the holistic management of contradictions.”
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Coaching, training, or supplementing with other CXO roles can fill skill gaps. And the CEO will need self-awareness and humility to listen and learn. As one Amrop partner explains: “This CEO may be a great CFO, but if the person is an introvert… that’s a taxing thing. If you’re not capable, you need help. I think about some of these elected leaders; great CFO, but can we really see this person leading the company? Not sure. Some major multinationals have solved part of the challenge. In one case, the CFO was promoted to CEO — a very quiet guy — and suddenly he had to step up and be a more public person. The company divided tasks so that other people started speaking a bit more, so that the new CEO didn’t become so much the center even if he became a very public figure all of a sudden.”
The CEO Succession Pool is Changing
Could more profiles join today’s CEO succession pipeline? “I do think that’s a possibility,” says an Amrop board member. “Maybe people who have grown up in sales or marketing — if they develop more of an operational mindset. But I see more a really well-rounded CHRO as being that next feeder pool, as long as they have that exposure. After all, there is a notable precedent: Years ago, CFOs were not necessarily the natural successor to a CEO.”
An Amrop managing partner agrees: “I think if we look at culture, values, and sustainability then it could be any CXO who takes the role based on his or her ability to drive exactly these topics. And personal credibility.”
But the wider scope of the CEO role will eliminate some who would have been high potentials under the old paradigm. “The role has become much more multi-facetted,” says an Amrop partner. “And that means that there are people who would have become CEO who suddenly won’t.”
The Shortening CEO Tenure
CEO churn persists, an Amrop board member confirms. “They are definitely staying less. I think there is much more scrutiny of the performance of a CEO.” Incomers need a sense of urgency: To understand the tolerance of how long it’s going to take to achieve results.”
An Amrop Partner agrees: “There’s less longevity of the CEO. A company of a hundred years could easily have lived with only four to five CEOs, each having twenty-year tenures. You rarely see that anymore. Particularly with listed companies, you have a short spurt. Because as soon as the agenda changes completely then the profile of the board also changes, and you see the CEO change. It doesn’t matter if the CEO has been very successful. The fact that the CEO is expected to embody an organization has a flipside: Because you iconize the CEO and align the CEO to purpose, when the purpose changes, it’s hard to keep the same person.”
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Contributed by Scott A. Scanlon, Editor-in-Chief and Dale M. Zupsansky, Executive Editor – Hunt Scanlon Media
